Tribes Discuss Profit Sharing

SACRAMENTO —  The Schwarzenegger administration opened formal talks Thursday with seven Indian tribes, aiming to gain a larger share of casino profits from tribes that want to expand their operations.

The closed-door negotiations began one day after another major casino tribe, the Agua Caliente Band of Cahuilla Indians, proposed an initiative for the November ballot that would grant the state 8.84% of casino profits in exchange for the right to expand.

Gov. Arnold Schwarzenegger has called on the tribes to pay the state as much as 25% of their casino profits, starting with $500 million in the new fiscal year that begins in July.

The governor’s main negotiator, former state appellate court Judge Daniel Kolkey, met for four hours with representatives of some tribes with large casinos who want to expand, and others that hope to cash in on California’s gambling industry.

In a written statement, Kolkey said the talks focused on tribes’ payments of “their fair share” to the state, the number of slot machines that tribes are authorized to operate and environmental effects on areas near the casinos.

“I am encouraged by the tribes’ receptivity to the issues important to the governor and to the people of the state of California,” Kolkey said, adding that he hopes to meet with other tribes.

While there had been preliminary discussions among the parties in recent days, the Thursday meeting, held in private offices outside the Capitol, was the first serious negotiation, participants said. Further talks could be held as early as next week.

Although the meeting involved only a fraction of the 53 California tribes that have casinos, it included five whose gambling businesses have been among the most successful.

Attorney Howard Dickstein, representing three of the tribes, said the goal is to have a deal in place by July.

“We think we can make this a win-win situation,” Dickstein said. “We think this will be good for tribal business and for the people of the state.”

Dickstein’s clients -- the Pala Band of Mission Indians in San Diego County and the Rumsey Band of Wintun Indians and the United Auburn Indian Community in the Sacramento area -- have casinos with 2,000 slot machines each, the maximum allowed under deals negotiated by Gov. Gray Davis in 1999.

Davis’ accords, struck when California was flush with tax revenue, provided that the state would receive minimal sums from the tribes. They require tribes to pay what has amounted to about $130 million a year into funds to aid tribes that have small casinos or have no gambling operations, and to help defray local costs associated with the casinos.

Other participants Thursday that have major casinos include the Morongo Band of Mission Indians, which is expanding its casino west of Palm Springs, and the Viejas Band of Kumeyaay Indians east of San Diego.

Tribes keep their revenue figures private. But estimates of the overall take from tribal gambling in the state range from $4 billion to $6 billion. The United Auburn Band, for one, is believed to be on a pace to earn upward of $300 million in the first full year of operation. It opened its Thunder Valley Casino in June east of Sacramento with its partner, Station Casino of Las Vegas.

A sixth tribe involved in the talks, the Pauma Band of Mission Indians, recently announced a deal with Park Place Entertainment Corp. to build a 2,000-slot machine casino and 500-room hotel in north San Diego County. Its current facility has 850 slot machines.

The final tribe, the Lytton Band of Pomo Indians, owns a card room in San Pablo in the Bay Area. It is seeking approval to turn the facility into a Nevada-style casino with slot machines.